The US Experiment with Fair Trade Laws: State Police Powers, Federal Antitrust, and the Politics of 'Fairness', 1890–1938

by Laura Phillips Sawyer

Overview — In a study of California retail druggists at the turn of the twentieth century, Laura Phillips Sawyer, finds that price-fixing counterintiutively increased competition.

Author Abstract

Prior to the Great Depression and President Franklin Roosevelt’s New Deal programs, considerable pressure for antitrust revision came from trade associations of independent proprietors. A perhaps unlikely leader, Edna Gleason, organized California’s retail pharmacists and coordinated trade networks to monitor and enforce Resale Price Maintenance (RPM) contracts, a system of price-fixing, then known as “fair trade.” Progressive jurists, including Louis Brandeis, and institutional economist E.R.A. Seligman supported RPM as a legitimate tactic to protect small businesspeople and enhance non-price competition. The breakdown of legal and economic consensus regarding what constituted “unfair competition” allowed businesspeople to act as intermediaries between heterodox economic thought and contested antitrust law, ultimately tailoring federal policy to accommodate state regulations.